Affordable innovation motivates consumers abroad to try the brand
Strong local partnerships build market connections
TCL is one of China’s pioneering export brands. How did the company transform from a domestic to a global business?
The business started in 1981, so this year TCL celebrates its thirty-fifth anniversary. We first expanded internationally over 10 years ago with two acquisitions: Thompson Electronics for TVs and Alcatel for phones. Today, we’re primarily in two businesses: multi-media, including smart TVs; and telecommunications. We have operations in over 160 countries, and almost half of our revenue comes from overseas, primarily from strong B2B relationships with telecommunication carriers.
TCL has built a substantial business in the US, a challenging market for many Chinese brands. What role did brand play? What can other brands learn from TCL’s success?
In developed markets like the US, which are very competitive and sophisticated, a Chinese brand needs to overcome consumer preconceptions about the quality of Chinese products. Brands need to exceed consumer expectations. We took a lot of baby steps along the way in the US. Before consumers got to know us we needed to give them reasons to try our brand. Those reasons were innovation and quality. That approach is consistent with how we think of brand as a triangle with three major elements: our corporate commitment, our products, and the consumer perception. We want to be perceived as the corporation committed to producing brands that provide affordable innovation. That is our product strategy. It is why we produce products in our own factories to ensure quality. In 2013 we purchased the naming rights to the famous Hollywood site then called Grauman’s Chinese Theater. It is now TCL Chinese Theater. This building is not simply a movie theater, it is also a landmark, and it is one way that we demonstrate our respect for local culture.
How does TCL’s US experience differ from its brand-building activities in developing or fast-growing markets?
We have strong business partners in Latin America, in Brazil and Argentina, for example. These partners distribute TCL products, but we think of them as true brand-building partners. They help us understand the local markets and how to promote the brand and connect with the consumer’s life. We listen to their insights about the local market. For example, In China we sponsor soccer, basketball, and volleyball because we want consumers to associate TCL with a competitive spirit. In Latin America soccer is important, and we work with our partners to associate TCL with soccer. These local partnerships are our secret recipe.
How does TCL’s success overseas impact its stature in China?
The Chinese customer learns that TCL is not only a local Chinese brand, but also a global brand that produces products of international quality. Similar to the development of Samsung from a local Korean brand to a global brand, we know that we need to begin with a strong brand in China.
What are TCL’s future goals and what steps are you taking to accomplish them?
As we grow beyond our thirty-fifth year, we need to take a very successful brand and unlock its potential for future growth. That requires unifying our brand across every country where we compete to ensure consistent quality and to deliver one brand for one world. We want to transform ourselves into a B2C business overseas. Next year we will do more B2C communication to demonstrate that we are serious about establishing deep roots in the US, for example. Our brand promises to help consumers live what we call, “The Creative Life.”
Has the perception of Chinese products as cheap and of low quality changed?
Chinese product quality is improving. And consumers are seeing this change. But there is still a gap between the new reality of Chinese products and the consumer perception. The gap is narrowing in part because of the changing perception of China itself. The country is influencing the world politically and economically. The more positive view of Brand China is one outcome of the rising global stature of China.
What other factors influence the more positive view of Brand China?
Starting 15 or 20 years ago, brand choice for Chinese consumers expanded from almost nothing to virtually unlimited. Chinese consumers suddenly could choose from international brands that entered China and international brands that they encountered traveling abroad. As their expectations changed, Chinese consumers raised the bar for Chinese brands, forcing them to improve quality to remain competitive.
Is the consumer perception about Chinese product quality changing across all categories?
The perception is changing fastest for brands in Internet-driven categories. But traditional categories such, as fashion or food, are also transforming, although perhaps at a slower pace. Over the next five years, with the continued expansion of Internet infrastructure, all brands will be Internet brands. Then the improved view of Brand China will apply across all categories.
As they work to raise the perception of Brand China, do Chinese brands bring any competitive advantage that is specifically Chinese?
Speed. Chinese brands are fast. Also, many Chinese brands are relatively young, having been established during the past 30 years of economic reform. Many Chinese brands are still run by their founders, which results in a high level of entrepreneurship and adaptability. In contrast, western companies are more often run either by a later generation of family owners or by professional managers.
In what areas do exporting Chinese brands need to improve?
It becomes more difficult for Chinese companies to remain nimble as they expand to multiple overseas markets. They then encounter western companies that have in place the sophisticated systems that help control this kind of expansion. Chinese companies need to improve their use of systems as a way to facilitate speed and growth. Also, it is critical for exporting Chinese companies to remember that they influence the consumer perception of Brand China. Chinese brands need to be sensitive to local market needs. They need to be humble and respectful of other cultures.